Economic impact of witers' strike reached far beyond Hollywood

Ray PerrymanMidland Reporter-Telegram

Published 6:00 pm, Friday, February 22, 2008

To some people, it might seem that the recently-ended writers' strike affected only a small group of individuals. In reality, it involved thousands of people and reached far beyond the Hollywood neighborhoods and the Big Apple boulevards.

Those of us whose pocketbooks were not directly affected by the situation have been looking forward to the time when our TV viewing will not be inundated with reruns and reality shows, and when more movies will start hitting the big screens. Some television shows, however, may now wait to start up production until next season due to the shortage of weeks remaining. Others may not start back at all due to the loss of viewers.

As in similar walkouts from various industries in the past, not everyone involved got what they asked for or felt they deserved, but the settlement reached recently has enabled people to return to work with hope for more equitable financial benefits, especially as related to "new" media such as the Internet and "on demand" cable and television outlets.

The strike of the Writers Guild of America against Hollywood studios, networks, and production companies - the first in 20 years - started November 5. About 12,000 East and West coast guild members were directly involved. In Los Angeles, the entertainment industry provides about 3.5 percent of the overall employment, and in New York, the film and television sectors account for some 2 percent of the area's jobs.

More than 6 million people, from agents and managers to production and broadcasting crews have felt the strain of the three-month dispute.

The 1988 strike lasted 22 weeks and was estimated to cost the entertainment industry some $500 million. Because of the build-up of scripts prior to that walkout, many filmmakers and television producers were able to continue operations.

Economic losses to the Los Angeles area economy as a result of the current three-month strike are estimated at more than $21 million per day in direct spending. A substantial portion of the loss resulting from the cessation of scripted television programming was due to layoffs of support staff and the shuttering of production companies.

Perhaps the economic strain of the strike on Los Angeles County's $442-billion annual economy, of which the entertainment industry provides some 7 percent or around $30 billion, has not been too significant, but the impact on ancillary activities has been of major importance. Businesses hard hit by the situation included mom and pop stores, caterers, dry cleaners, set designers, carpenters, drivers, costumers, and even dog groomers, as well as local area hotels and restaurants.

In near-by Santa Clarita Valley, where more than 6,000 people owe their livelihood to the film and TV industries, permits for local filming fell steadily because of the strike during the three-month timeframe, and most sound stages went silent.

Additional revenues were lost because of changes in the airing of the People's Choice Awards and the Golden Globes programs, which reduced the television audience size and diminished opportunities for advertisements. Long-term strikes of this nature often lead to migration of both audiences and advertisers to other forms of entertainment.

The impact of the strike has not only been felt on both U.S. coasts, but even as far away as China where more than 40,000 carpenters, electricians, and laborers were laid off due to the lack of work on U.S. movies and television shows, resulting in a loss of hundreds of millions of dollars to that economy.

The settlement of the walkout reduces the concern over the possibility of another strike this summer by approximately 150,000 actors whose contracts are due to expire June 30. Although that possibility still remains, the fact that various sides are communicating with each other regarding problems and possibilities greatly diminishes the probability of a similar major economic dilemma. The resolution also virtually assures the star-packed audience of the 80th Academy Awards program on February 24 to be up to its traditional flair.

Those who were impacted personally because of lost wages are undoubtedly pleased that payrolls will once again include their names, plus a little extra, compliments of the agreement that increases residuals and shares revenues from the Internet in the future. We are finally back to a situation where "The show must go on!!" I, for one, am very pleased.

--

Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com). He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.